| Loan Amount | - Base loan amount cannot exceed the FHA Statutory Mortgage Limits for each county
- Total loan amount with financed UFMIP may exceed the maximum statutory loan amounts
- Loan amount exceeds FHFA conforming limit is high balance. Determination is the use of base loan amount, not the total loan amount that includes financed UFMIP
- Total loan amount is always rounded down to nearest dollar amount
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| Loan Terms | - Fixed : 10 - 30 Years
- ARM : 5/1 with 1 YR TREASURY BILL (Margin : 2%, Cap : 1/1/5, Look-back : 45 days) with 30 YR amortization. Qualify at initial note rate for LTV less than 95%. Note rate + 1% applies for LTV 95% or more
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| Occupancy | Primary Residence only |
| Underwriting Method | - AUS : Loan must have Accept/eligible or Approve/eligible
- Manual underwriting. Down grade from AUS to Manual is required even if result is A/A in following circumstances;
- Disputed derogatory credit accounts are $1,000 or more
- Self-employment income reflecting 20% or more of decline over the last 2 years
- Significant derogatory credit event seasoning has not been met (see ‘credit’ section below for seasoning period)
- Borrower has late mortgage payment history/Undisclosed mortgage debt (see ‘housing payment history’ section below)
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| Ineligible Programs | 203K loans, 203(h), MCC, HUD REO, Section 8, Indian Reservations (Section 184), Texas Section 50(a)(6), Construction to Permanent financing |
| Age of Documents | - 120 days from the closing date
- Income must be dated within 60 days from closing date
- Asset must be dated within 30 days from note date
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| Eligible Borrowers | - US Citizens and Permanent resident aliens with social security number
- Non-permanent resident alien : Borrower must be eligible to work in US provided one of the following:
- an Employment Authorization Document (USCIS Form I-766) showing that work authorization status is current;
- a USCIS Form I-94 evidencing H-1B status, and evidence of employment by the authorized H-1B employer for a minimum of one year;
- evidence of being granted refugee or asylee status by the USCIS (EAD or I-94); or
- evidence of citizenship of Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau
- Inter-vivos revocable trust
- DACA borrower
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| Non-Occupant Co-Borrower | - Must be US citizen or have a primary residence in US
- Max LTV 75% if co-borrower is not a family member, or is family member who is also seller
- Max LTV 75% for 2-4 unit property
- Income cannot be used for cash out transaction
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| Properties | - Eligible properties :1-4 unit residential (including 2-3 units with ADU), Condo unit in FHA’s approved list, Leasehold estates
- Ineligible properties : Condo hotels, Co-ops, Leasehold estate in condo project, Manufactured home, Modular home, Mixed-use, Timeshare, Construction to permanent, Hobby farm, 3D printed homes
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| Number of Financed Properties | 203K loans, 203(h), MCC, HUD REO, Section 8, Indian Reservations (Section 184), Texas Section 50(a)(6), Construction to Permanent financing |
| Appraisal | - FHA appraisal transfer is permitted when the case number is transferred from another lender
- Properties with “unpermitted” structural additions are allowed under the following conditions:
- The subject addition complies with FHA guidelines
- The quality of the work is described in the appraisal and deemed acceptable (“workmanlike quality”) by the appraiser
- The addition does not result in a change in the number of units comprising the subject property (e.g., a 1 unit converted into a 2 unit)
If the appraiser gives the unpermitted addition value, the appraiser must be able to demonstrate market acceptance by the use of comparable sales with similar additions and state that non-permitted additions are typical for the market area and a typical buyer would consider the "unpermitted" additional square footage to be part of the overall square footage of the property, and the appraiser has no reason to believe the addition would not pass inspection for a permit |
| Credit | - Each borrower must have at least one (1) credit score to be eligible
- A full tri-merged credit report is required for all borrowers on all transactions. Non-traditional credit is not permitted.
- Credit report inquiries must be reviewed per FHA guidelines
- Extenuating circumstances for derogatory credit are not permitted
- Significant derogatory credit event seasoning : BK - 2 years, DIL/SS/FC - 3 years
- If subject property is located in a community property state (AZ, CA, ID, LA, NM, NV, TX, WA, WI), and the borrower’s spouse is not included in the loan transaction, the non-borrowing spouse’s credit report must be obtained and debts should be included in DTI. Spouse’s credit report is used for establishment of debt only, and not evaluated for loan decision
- All judgments, including non-borrowing spouse, must be paid in full
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| Housing Payment History | Mortgage payment history- Applies to all mortgages on all financed properties
- Borrower must have made the payments for all mortgages secured by the subject property for the month prior to mortgage disbursement
- TOTAL A/A : Follow AUS, but manual down grade if
- Any mortgage on credit report reflects 3x30 or 1x60 plus 1x30 or 1x90 or less than 3 consecutive payments since completion of a forbearance plan within 12 months prior to case number assignment
- Mortgage not reported on credit report has a current delinquency or 1x30 in months 1-12 or more than 2x30 in months 13-24
- Manual underwriting : Both mortgage/installment payments must have 0x30 in most recent 12 months, and no more than 2x30 in 13-24 months. Revolving payments must be no more than 2x60 or 0x90 in the most recent 12 months
Mortgage payment history- TOTAL A/A : Not required
- Manual : For borrower(s) living rent-free, LOE from property owner must verify borrower has been living rent free and length of residency
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| Forbearance & Modification | - If the credit report evidences any forbearance red flags such as a blank or $0 payment, or note stating ‘affected by natural disaster’, credit supplement or document from current servicer is required to evidence borrower is not in forbearance, must be dated within 5 days from closing
- A borrower granted forbearance and continued to make all mortgage payments will be considered on time provided the borrower exits forbearance prior to closing
- For a borrower who was granted a forbearance plan, the borrower must have
- Exited the forbearance plan on the subject property, and
- Made at least three (3) consecutive payments within the month due since exiting forbearance (12 months for Cash Out)
- For a modified mortgage, the payment history since modification must be used in determining payment history. The borrower must have made at least six payments under the modification agreement
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| Employment and Income | Follow FHA guideline |
| Qualifying Ratios | - AUS : Follow AUS
- Manual underwriting
| Ratios | Compensating Factors |
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| 31/43 | No compensating factors required. Energy Efficient Homes may have stretch ratios of 33/45 | | 37/47 | One of the following: - 3 months PITI for 1-2 units or 6 months PITI for 3-4 units (includes standard reserve requirements)
- New total mortgage payment not more than $100 or 5% higher than previous total housing payment, whichever is less, AND 1x30x12 month housing history (cash-out 0x30x12). Must have housing payment history to use as a comp factor
- Residual income per VA Table of Residual Incomes by Region
| | 40/40 | The borrower has no discretionary debt based on the following: - The housing payment is the only open account with an outstanding balance that is not paid off monthly
- The credit report shows established credit lines in the borrower’s name open for at least six months
- The borrow can document that these accounts have been paid off in full monthly for at least the past six months
| | 40/50 | Two of the following: - 3 months PITI for 1-2 units or 6 months PITI for 3-4 units (includes standard reserve requirements)
- New total mortgage payment not more than $100 or 5% higher than previous total housing payment, whichever is less, and 1x30x12 month housing history (cash-out 0x30x12)
- Significant additional income not considered effective income (must verify and document that the income has been received for at least one year and likely to continue AND if included as income, would reduce the qualifying ratios to not more than 37/47)
- Residual income per VA Table of Residual Incomes by Region
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| Asset & Reserves | - Down Payment assistance programs are permitted in accordance with FHA guideline
- Cryptocurrency is not eligible, however, proceeds from liquidation is eligible
- Reserves
- TOTAL A/A: None for 1-2 units, 3 months PITI for 3-4 units. Gift is permitted
- Manual : 1 month PITI for 1-2 units, 3 months PITI for 3-4 units. Gift is not permitted
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| Mortgage Insurance Premiums | | Mortgages Endorsed on or after March 20 2023 |
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| LTV Loan Term | Base Loan Amount ≤ $726,200 | Base Loan Amount > $726,200 |
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| UFMIP | Monthly | UFMIP | Monthly |
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| LTV > 95% > 15 years | 1.75% | 0.55% | 1.75% | 0.75% | | LTV > 90% but ≤ 95 > 15 years | 1.75% | 0.50% | 1.75% | 0.70% | | LTV ≤ 90% > 15 years | 1.75% | 0.50% | 1.75% | 0.70% | | LTV ≤ 90% ≤ 15 years | 1.75% | 0.15% | NA | NA | | LTV > 90% ≤ 15 years | 1.75% | 0.40% | 1.75% | 0.65% | | LTV > 78% & ≤ 90% ≤ 15 years | NA | NA | 1.75% | 0.40% | | LTV ≤ 78% ≤ 15 years | NA | NA | 1.75% | 0.15% | Duration of Annual MIP based upon amortization term and LTV ratio at origination - LTV <= 90% 11 years
- LTV > 90% loan term
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| High Cost/High Priced Mortgage Loan | - High cost mortgage is not permitted
- FHA HPML is allowed if TOTAL A/A, FICO ≥ 620, minimum 120% VA residual income, all federal/state HPML requirement met
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| Purchase | - Minimum borrower contribution is 3.5%
- Max seller contribution is 6% of the purchase price
- Flipping : Property that is being resold 90 Days or fewer following the seller’s date of acquisition is not eligible
- Second appraisal is required If property is being resold 91-180 days following the seller’s date of acquisition, and resale price is 100% or more than seller’s acquisition price. When 2nd appraisal value is lower than 1st appraisal by more than 5%, lower value is used. Cost of 2nd appraisal cannot be charged to borrower
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| No Cash-Out Refinance | - At least one borrower on the existing mortgage must hold title to the property being refinanced prior to case number assignment
- Use of loan proceeds
- Rate/Term refi : Conventional, FHA, VA loan, any junior liens seasoned over 12 months, HELOC for purpose of repairs and rehabilitation of property, HELOCs with draw less than or equal to $1000 in the past 12 months, interest/late charges/escrow shortages, closing costs, and borrower paid repairs required by appraisal
- Simple refi : FHA loan, interest/late charges/escrow shortages, closing costs, and borrower paid repairs required by appraisal. *If current FHA loan is being refinanced within 3 years, unearned UFMIP refund credit is applied, according to refund schedule on SF 4000.1 handbook
- Max cash back to borrower is $500
- Max principal curtailment is $500
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| Cash Out | - At least one borrower must have owned and occupied the property as their primary residence for the 12 months prior to case number assignment
- 0x30x12 prior to case number assignment date for any mortgage trade line on the credit report
- Mortgage must be current for the month prior to closing
- If the mortgage on subject property is not reported on the borrower’s credit report or is not in borrower’s name, verification of mortgage (VOM, cancelled checks, bank statements, etc.) is required to evidence all payments made in last 12 months have been made by borrower
- If the loan being paid off is FHA, VA or USDA : The borrower must have made at least six consecutive monthly payments on the existing first mortgage and any junior liens included in the refinance, beginning with the payment made on the first payment due date, and the first payment due date of the new loan occurs no earlier than 210 days after the first payment due date of the existing loan
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| Net Tangible Benefit | Streamline only |
| Power of Attorney | Allowed |
| Escrow Waivers | Not allowed |
| Subordinate Financing | Permitted for purchase. Existing subordinate financing can be re-subordinated for refinance. Total credit limit is used for CLTV regardless the line has been drawn out in full or not. New financing is not permitted |
